Reactionary tool to proactive strategy: captives have evolved, say HDI Global leaders

The 2025 Airmic survey, conducted in collaboration with HDI Global, reveals that 67 per cent of respondents increased their captive utilisation in response to market conditions – but the strategic value of captives now extends far beyond mere market cycle navigation.

“Captives remain the cornerstone and primary risk financing tool for a successful risk management strategy,” said Dan Sammons, Captives Manager at HDI Global UK & Ireland. “Indications are positive in that despite a changing market cycle in some lines and segments, captive owners continue to actively look to increase participation, add new lines of business, use innovative reinsurance and explore deploying insurance capacity to support wider business objectives.”

This evolution from reactionary tool to proactive strategy is reshaping how companies approach risk. “The Airmic survey results in conjunction with HDI Global show what a key strategic tool captives are for the risk manager to effectively manage their business risk profile,” said Oliver Davies, emphasising the importance of captives. “It is clear risk managers see the value in having a strong captive strategy to not only support the variation in the insurance cycle but also to help the business manage its risks more effectively.”

“As renewable energy projects become mainstream, captives are evolving from traditional risk management tools into strategic enablers of the green energy transition.”

Expanding coverage lines

While property and liability lines dominate HDI Global’s captive solutions, the industrial insurer offers expertise across a growing range of specialised risks. Mark Appleton, Head of Liability Global, notes that environmental liability presents particular opportunities: “Clients are often the best positioned to assess their own environmental risks, which naturally means they have an advantage in managing this type of coverage. As a result, captives are well suited to address these risks."

This creates what Appleton calls “an ideal scenario” for captive solutions in the environmental space, with HDI Global recently expanding its environmental liability insurance to international markets and adding social and governance coverage to policies.

Addressing emerging risks in the energy transition is another key focus area for HDI Global. According to Alex Tarantino, Managing Director of HDI Global Singapore, “As renewable energy projects become mainstream, captives are evolving from traditional risk management tools into strategic enablers of the green energy transition, offering customised coverage for emerging technologies and direct access to reinsurance markets.” 

Building on their environmental capabilities, HDI Global’s Singapore hub serves as the company’s APAC centre for technical risk assessment in the rapidly expanding clean energy sector. “In APAC, renewable energy projects are accompanied by new risks such as battery storage and prototypical technologies,” “We combine power expertise with engineering capabilities and dedicated risk engineers to support this transition through specialised captive arrangements.”

The circular benefit of this evolution extends beyond risk transfer. “Captives provide significant financial advantages through predictable pricing and the ability to reinvest underwriting profits and reserves into further sustainability initiatives,” Tarantino emphasised.

Shadow of liability claims

With HDI Global expanding its coverage offerings to address emerging risks, it becomes increasingly important to evaluate the long-term implications of the potential claims. “In property coverage, for example, if a fire occurs, they rebuild the building and pay the business interruption loss, with claims typically settled within a couple of years,” explains Jelto Borgmann, Head of Captive Services at HDI Global. “Liability works differently and depending on the trigger, the claims process can stretch over 20 to 30 years, with the claims taking a long time to run off.”

This long-tail characteristic creates additional complexity in credit assessment. “As fronting insurer, we must evaluate whether the captive will still be in existence in 20 or 30 years,” Borgmann adds.

As captives take on more complex and varied risks, the expertise to manage claims becomes a critical differentiator. This evolution demands sophisticated claims handling beyond what many parent companies initially anticipate. David Vigier, Director of Captives Services and Claims Strategy at HDI Global France, explains: “Corporations that historically relied on the insurance markets to absorb losses from a lack of prevention plans are now required to improve the quality of their risks and statistically trim down the number of their claims.”

This shift requires captive owners to develop new expertise. “Corporations overall have little choice but to grow their focus on the claims now hitting them and develop their skills to efficiently manage them to the best of their interests,” the expert adds.

For HDI Global, supporting clients through this transition is essential. “We are putting our claims team and the quality of our claims performance at the core of our strategy. We are working to improve their impact and are developing and strengthening our relationship with our insureds and their captives to prove that we are committed to bringing further robustness and resources to our claims organisation in the near future," said Vigier.

Oliver Davies is the Chief distribution officer, HDI Global UK and Ireland. He can be contacted on oliver.davies@hdi.global 

Dan Sammons is Captives manager, HDI Global UK & Ireland. He can be contacted on dan.sammons@hdi.global 

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